Rs 15,000 crore raised via QIP will support growth for two years: SBI chief

SBI sold 522 million shares at a price of Rs 287, largest share sale in secondary market by a bank

The State Bank of India (SBI) on Friday said the Rs 15,000 crore equity capital raised through qualified institutional placement (QIP) would support growth and capital requirements till March 2019.

SBI chairman Arundhati Bhattacharya said the capital base would help to support credit expansion. The bank’s loan growth is estimated at 10-12 per cent in 2017-18 and 14 per cent in 2018-19.

The SBI’s advances rose by 7.8 per cent to Rs 16,27,273 crore in 2016-17. Taking into account loans of associate banks, the SBI’s loan book expanded to Rs 18,96,887 crore in 2016-17.

The capital adequacy ratio for the merged entity will rise by 79 basis points to 13.64 per cent after the issue and its Tier-I capital to 10.20 per cent.

The SBI sold 522 million shares at a price of Rs 287.25, the largest share sale in the secondary market by a bank. The share sale was through private placement that opened on June 5.

The QIP book was oversubscribed and demand exceeded Rs 27,000 crore. About 26 per cent of the issue was taken up by foreign institutional investors and 25 per cent by domestic institutional investors, excluding Life Insurance Corporation.

The SBI said the QIP allocation enhanced the diversity of its shareholder base. After its merger with erstwhile associate banks, the SBI was once again at an inflection point where the positive bias would be significant, Bhattacharya said.

The government’s shareholding in the merged entity will decline to 57.07 per cent after the issue. LIC’s stake will rise to 10.4 per cent from 8.6 per cent.

The bank is also focusing on shedding some non-core investments like stakes in National Stock Exchange and UTI Mutual Fund in order to raise resources.

The SBI said it had not cancelled unused lines of credit to the debt-laden telecom sector. The Reserve Bank of India recently asked banks to review their exposure to the telecom sector, which has a total debt of Rs 4.6 lakh crore, and make higher provisions to firewall their business against any future stress.

The sector is facing a squeeze on revenue and profitability due to cut-throat competition with the entry of Reliance Jio.

“As regards to withdrawal of unused lines of credit to the telecom sector, we have not withdrawn any. As a matter of practice, we review all accounts irrespective of sector,” SBI Managing Director B Sriram said.